New tax rules - savings on home renovations

New Tax Rules Can Save You Thousands on Home Renovations

Coming rebates for energy-efficient upgrades can be combined with existing tax credits

By Ashlea Ebeling, The Wall Street Journal, Aug. 9, 2023

Household savings can range from hundreds of dollars for single items such as an electric cooktop or dryer to $8,000 for a heat pump or cutting home energy use by 35% or more. Those planning such projects may want to hold off until the program begins…

States will announce the particulars in coming months, based on guidelines issued by the Energy Department in July. These rebates can also be stacked on top of existing tax credits and utility offers for heat pumps, solar and EVs…

A low-income household, defined as below 80% of an area’s median income, could claim up to $22,250 to fully cover energy efficiency upgrades, Saul-Rinaldi said.

A moderate-income household, earning between 80% and 150% of area median income, could potentially get $19,000 in incentives on a $32,000 project. Above that, a higher-income household could get $7,200 on a home performance retrofit, a combination of $4,000 in rebates and $3,200 in tax credits…

Getting a home energy audit will be a requirement for the new rebate program for cutting overall energy use.

The Internal Revenue Service issued guidance last week specifying that the audit must identify the most significant and cost-effective energy-efficiency improvements, including an estimate of the energy and cost savings to each improvement. Taxpayers can get a $150 tax credit for a $500 audit. …

Under revamped tax credits, homeowners can get up to $1,200 for insulation and other items, and up to $2,000 for a heat pump, calculated at 30% of the costs. A tax credit lowers your tax bill dollar for dollar…You can claim improvements made in 2023 on IRS Form 5695 when you file taxes next year… [end quote]



Thank you, Wendy. This may come in handy.